Japan’s economy contracts by a more than expected 0.2% from prior three months

Japan’s economy contracted 0.2% quarter in quarter in the quarter end in March, a more clear fall than expected, showed the preliminary government data on Friday.

The GDP figure was a fall greater than the contraction of 0.1% expected by the economists surveyed by Reuters.

In an annualized base, Japan’s GDP contracted 0.7% in the first quarter, also more than the 0.2% fall expected by the Reuters survey.

Japan’s GDP data arrives at a time when the country is locked in commercial negotiations with the US, with initial conversations between both sides so far without giving a conclusive agreement.

The Bank of Japan had recently warned on May 13 that it is likely that the country’s economy be moderate in the future, saying that this was due to the effects of commercial policies worldwide.

“Negative demand clashes are expected, including the impact of the greatest uncertainties on fixed business investment and household consumption, a decrease in the volume of exports to the United States and a deterioration in the profitability of Japan’s export,” the Boj Wreote.

The United States tariff policy will exert down pressure on economic activity and prices in Japan, the Central Bank said.

Despite these growth concerns, the Central Bank seems to continue increasing its policy rate, and some members of the Boj Board say that the bank’s inflation target or 2% is likely to be carried out, and would continue to increase and entitled.

Inflation in Japan had exceeded the goal of 2% of BOJ for three consecutive years, more recently reaching 3.6% in April.

However, other members of the Board also warned that the perspective is uncertain, and that the bank should “examine the possibility of deviations up and down of their perspective and carry out monetary as appropriate.”

The hero of the Bank of Japan rate of 0.5% on May 1 for a second consecutive meeting.

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